Calling Harper's Bluff on Keystone

Stephen Harper says that Canada is going to have to try to sell Alberta oil to China, since U.S. politics have blocked the Keystone XL pipeline. Barack Obama says that if Congress forces him to make a decision on the Keystone XL pipeline before he is ready, he will have no choice but to refuse a presidential permit.

The politics surrounding the Keystone pipeline have entered the phase of threat and counter-threat when media accounts start to resemble the pre-match theatrics of heavyweight boxers. The question is: Who is bluffing?

Friends in Alberta have been saying for years that the U.S. and President Obama in particular would never be so stupid or so reckless as to reject the Keystone permit. After all, the pipeline would create jobs in a recessionary economy that sorely needs them and help to lower U.S. dependence on oil from hostile countries, especially in the Middle East -- a region that Obama can't flee fast enough.

Inside the Washington beltway, cynical observers (are there any other kind?) note that Canada has no means to get oil from Alberta to the West Coast and thereby to Asia; various pipeline proposals face not just harrowing geographic obstacles but native groups just as tough to negotiate with as Nebraska landowners. At best, Canada is a decade away from being able to export oil to China in any significant volume and although the Keystone pipeline is delayed it is still likely to be built sooner.

Republicans in Congress add that Obama's reluctance to act is driven by his re-election campaign: the president needs environmental groups to back him with volunteers and cash; for that he needs them to be enthusiastic. Congressional Republicans and all of the GOP presidential aspirants have pledged to approve Keystone, so Obama has positioned himself as the sole hope of blocking the project.

If Obama's re-elected, he may approve Keystone anyway, but for now he must talk tough, they say. Canadians should keep calm and carry on until the U.S. 2012 election makes federal approval of the pipeline feasible politically.

On balance, while there are plenty of threats and bluffs coming out of the U.S. where Keystone is concerned, it's Canada and Stephen Harper whose bluffs are being called. It's certainly true that there are other suitors for Canadian oil, but until there is a way to get it to the Pacific, Harper's attempt to fashion a "third option" foreign policy for Canadian oil exports is no more convincing a threat to Washington, D.C. than Pierre Trudeau's "third option" response to the Nixon administration's economic nationalism was.

The country that gave the world heavyweight champions Joe Louis and Mohammed Ali, not to mention costumed wrestlers, is accustomed to bluff and bluster. Empty threats are not effective with most Americans and project Canada's weakness and frustration in the midst of negotiations.

Canada's best move now would be to quietly build the pipeline to the West Coast, regardless of the outcome of the U.S. 2012 elections or the progress of Keystone XL construction. Canada needs real options to avoid being repeatedly held captive to American political caprice. To earn U.S. respect and stop the bullying by environmental groups and politicians, Canada must turn its Keystone threats into credible promises, and act on them when necessary.

Bullies do not respond to anything else, and bluffing generally makes matters worse.